BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 648

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          648 (Mendoza)

          As Amended  August 15, 2016

          Majority vote

          SENATE VOTE:  27-12

          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |Aging           |4-1  |Brown, Gray, Levine,  |Dahle               |
          |                |     |Lopez                 |                    |
          |                |     |                      |                    |
          |Judiciary       |10-0 |Mark Stone, Wagner,   |                    |
          |                |     |Alejo, Chau, Chiu,    |                    |
          |                |     |Gallagher,            |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Holden, Maienschein,  |                    |
          |                |     |Ting                  |                    |
          |                |     |                      |                    |
          |Appropriations  |16-4 |Gonzalez, Bloom,      |Bigelow, Gallagher, |
          |                |     |Bonilla, Bonta,       |Jones, Obernolte    |
          |                |     |Calderon, Chang,      |                    |


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          |                |     |Daly, Eggman, Eduardo |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood,  |                    |
          |                |     |McCarty               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |

          SUMMARY:  Adds referrals to residential care facilities for the  
          elderly (RCFEs) to the body of law requiring anyone who refers  
          someone to a skilled nursing or intermediate care facility for  
          compensation to be licensed as a referral agency, and  
          establishes new requirements on referral agencies.   
          Specifically, this bill:  

          1)Adds referrals to RCFEs to the body of law requiring anyone  
            who refers someone to a skilled nursing or intermediate care  
            facility for compensation to be licensed as a referral agency.

          2)Allows the State Department of Social Services and the  
            Department of Public Health to set an annual licensing and  
            certification fee at an amount no greater than the amount  
            required to cover the reasonable and actual cost of  
            administering the licensing program.

          3)Prohibits a referral agency from referring any person to an  
            RCFE if that RCFE does not meet state licensing standards.

          4)Prohibits any extended care facility, skilled nursing home,  
            intermediate care facility, or a residential care facility for  
            the elderly from paying a commission or fee to a referral  
            agency that is not licensed.


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          5)Makes it unlawful for a medical professional or employee of a  
            government agency, hospital, or other healthcare institution,  
            including, but not limited to, physicians, nurses, and social  
            workers, to accept a payment in the form of money or other  
            consideration for referring patients, clients, or customers to  
            an RCFE.

          6)Requires a referral agency to provide a disclosure statement  
            to each person receiving its services, and to retain, for  
            three years, a signed acknowledgment stating that the  
            disclosure statement was received.  The disclosure statement  
            among other things must include:

             a)   Whether the referral agency has an agreement or contract  
               with the facility to which the person is being referred.

             b)   If a commission or fee will be received by the referral  
               agency from the facility as a result of the referral, if  

             c)   Any gift or exchange of monetary value between the  
               facility and the referral agency that is in addition to, or  
               in lieu of, a commission or fee.

             d)   Any fee charged to the person or persons by the referral  
               agency, and requires a notice to include a description of  
               the services being rendered for that fee and the referral  
               agency's refund policy.

          7)States that failure to provide the disclosure statement or  
            retain the acknowledgment, constitutes unfair competition  
            which includes unlawful, unfair, or fraudulent business acts  


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            or practices and unfair, deceptive, untrue, or misleading  
            advertising and is subject to a civil penalty of up to $2,500.

          8)Limits the personal information of a consumer that a referral  
            agency can share with other parties or from disclosing any  
            personal information of a person receiving services, unless  
            authorized to do so. 

          9)Prohibits a referral agency from holding any power of attorney  
            for a person receiving placement referral services, or  
            receiving or holding their property in any capacity.

          10)Requires referral agencies to maintain liability insurance  
            coverage in an amount of at least $1 million per person  
            occurrence and $3 million in the total annual aggregate, for  
            negligent acts or omissions.

          FISCAL EFFECT:  According to the Assembly Appropriations  

          1)Significant one-time costs to the Department of Social  
            Services, potentially exceeding $1 million General Fund to  
            establish the licensure program, as well as significant  
            fee-supported ongoing costs in the range of $1.5 million or  
            higher.  Estimates of ongoing costs are subject to significant  
            uncertainty due to the varying size and complexity of referral  
            agencies, uncertainty about complaint volume, and number of  
            licensees.  If complaint volume is high or significant  
            enforcement resources are necessary, costs could be higher.



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          Author's statement:  According to the author, "Elder care  
          referral agencies are mostly unregulated, in spite of the fact  
          that they can be deeply involved in the decision making of a  
          senior or their family when determining care options.  Consumers  
          rely heavily on the advice and recommendations of referral  
          agencies, especially since seniors and their families typically  
          seek the assistance of a referral agency following a decline in  
          independence or a significant health event, which can be a  
          stressful and traumatic time.  Given the significance of these  
          health and life decisions, California should ensure that  
          referral agencies are at least meeting minimal standards."

          What are RCFEs:  There are approximately 8,000 Assisted Living,  
          Board and Care, and Continuing Care Retirement homes that are  
          licensed as RCFEs in California.  These residences are designed  
          to provide home-like housing options to residents who need some  
          help with activities of daily living, such as cooking, bathing,  
          or getting dressed, but otherwise do not need continuous,  
          24-hour assistance or nursing care.  The RCFE licensure category  
          includes facilities with as few as six beds to those with  
          hundreds of residents, whose needs may vary widely.  More than  
          90% of RCFEs in California are for-profit homes, the majority of  
          which are small facilities.  Most residents pay privately or  
          with long-term care insurance, and fees can range from $1,500 to  
          more than $8,000 per month. 

          In recent years, there have been several high-profile incidents  
          and investigative articles that have drawn attention to  
          questions about the adequacy of Department of Social Services  
          (DSS) oversight of RCFEs.  In July 2013, ProPublica and  
          Frontline reporters wrote and produced a series of stories on  
          Emeritus, the nation's largest RCFE provider.  Featured in the  
          stories was a woman who died after receiving poor care at a  
          facility in Auburn, California.  The series documented chronic  
          understaffing and a lack of required assessments and substandard  
          care.  In late October 2013, 19 frail seniors were abandoned at  
          Valley Springs Manor in Castro Valley by the licensee and all  


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          but two staff after the state began license revocation  
          proceedings for the facility.  DSS inspectors, noting the  
          facility had been abandoned, left the two unpaid service staff  
          to care for the abandoned residents with insufficient food and  
          medication, handing them a $3,800 citation before leaving for  
          the weekend.  The next day sheriff's deputies and paramedics  
          sent the patients to local hospitals.

          Arguments in Support:  Writing as the sponsor of the bill, the  
          Consumer Federation of California states, "generally, referral  
          agency services are offered at no charge to seniors.  Instead,  
          referral agencies receive a commission or finders' fee from the  
          care facility after they have successfully referred a senior for  
          care and housing.  The commission or finders' fee is typically  
          calculated as a percentage of the seniors monthly rent, creating  
          an incentive for the referral agent to place the senior in a  
          specific facility or one where the agency has an exclusive  
          referral contract.  Oftentimes these are more expensive for the  
          senior, even if the senior doesn't need a high level of care or  
          may have difficulty affording it."

          Previous Legislation:

          AB 1863 (Jones) of 2014 would have established "domestic home  
          care aide referral organizations" as a new licensure category  
          under the Home Care Services Consumer Protection Act overseen by  
          the DSS, as specified..  AB 1863 was held in the Senate  
          Appropriations Committee.

          SB 398 (Romero) of 2003 would have, among other things, made the  
          licensing and regulation provisions of the Employment Agency,  
          Employment Counseling, and Job Listing Services Act applicable  
          to health care employment agencies, as defined.  SB 398 was held  
          in the Senate Appropriations Committee.


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          SB 70 (Murray) of 1999 would have established licensing and  
          regulations for residential care facilities for the elderly  
          referral agencies.  SB 70 was held in the Assembly  
          Appropriations Committee.

          Analysis Prepared by:                                             
                          Barry Brewer / AGING & L.T.C. / (916) 319-3990